The No. 1 mistake beginners make with travel cards, according to The Points Guy

By Genna Contino

The Points Guy's Brian Kelly gave me a crash course in annual fees and flexible redemptions

Credit cards with transferable points offer travelers more flexibility when booking trips.

Last week I wrote about working with a financial adviser to pay down my credit-card balance and get my debt under control. So you might be wondering why I'm already talking about shiny new cards with triple-digit annual fees.

I'm not applying for one yet. My first priority is paying off existing balances without adding to them. But once the debt is gone, I want to consider whether a travel rewards card could help offset the cost of trips I'm already planning to take - without encouraging me to spend more.

Sign up to get Don't Short Yourself in your inbox weekly.

To figure out how someone like me, a newbie to the points world who has never owned a premium rewards card, should navigate this sphere without making costly mistakes, I decided to use my journalist privileges to phone a friend (or a source, to be precise) and ask Brian Kelly, aka The Points Guy, for help. You can watch the full interview here.

Money tip of the week: Don't go all in on a co-branded airline or hotel credit card

Kelly, who founded the travel and credit-card comparison site The Points Guy in 2010, first warned me of what he considers one of the biggest mistakes newcomers to travel rewards make: choosing a card tied to a specific airline or hotel chain.

Instead, he said, beginners may be better off opening a card with transferable points. These points can be moved to participating airline and hotel loyalty programs, giving travelers more flexibility when they're booking a trip.

Brian Kelly founded travel and credit-card comparison site The Points Guy in 2010.

"It is not a good strategy in 2026 to love one airline and put all your spend on one airline and go all in, because it would be like investing for retirement in just Apple stock," Kelly said.

Say a couple reserved a block of rooms at a Hilton property for their wedding. Marriott cardholders attending the event would be out of luck if they wanted to use points. Those with American Express points, however, may be able to transfer those points to Hilton or another participating hotel program offering a better deal.

Three things to consider before choosing a travel rewards card

Beyond paying off your balance in full every month to avoid interest charges, Kelly suggested considering three things: the annual fee, the card's protections and what happens if the card stops working for you.

-- Calculate what the annual fee will actually cost you: Start with the fee. Amex Platinum, for instance, has a whopping $895 annual fee, but the benefits may mitigate that cost. Start with the fee and subtract only the value of the benefits you would have used anyway. For instance, for a card with a $300 fee that offers an automatic $100 annual travel credit, the net cost could actually be $200. That said, a credit does not translate to savings if it encourages you to spend on things you would not have otherwise bought. The same applies to statement credits for dining, streaming services and certain retailers: Those credits only have value if they fit with your existing habits.

-- Compare purchase and fraud protections: Some premium credit cards offer purchase protection on certain items against damage, loss or theft for up to 120 days. Kelly said his card issuer reimbursed him after he left a $2,000 Moncler jacket on a film set in Iceland. He also recalled that his credit-card company refunded him after his child scribbled on a new chair with a marker. "Vandalism is included, even if it is your own toddler," he joked. Of course, coverage varies by card. Using credit cards can also make it easier to dispute a fraudulent charge, and the money won't immediately be withdrawn from your checking account. Debit cards have fraud protections, too, but an unauthorized withdrawal can temporarily affect access to your funds.

-- Ask whether you can downgrade instead of canceling: If you determine an annual fee isn't worth paying every year, don't rush to close the account until you find out if the card issuer offers the option to downgrade to a lower-fee or no-fee version. But before agreeing to make a change, ask the issuer what will happen to your points, your credit limit and other benefits. It's also worth asking if the card issuer offers any retention bonuses or fee waivers. That approach may allow you to preserve your available credit and credit history, which is a factor in your overall credit score.

The cards I'm considering

Once I'm ready to apply, I'll weigh these two options:

The Bilt Palladium, $495 annual fee: I was already considering the Bilt card before talking to Kelly because it appears to fit how I currently spend. Most of my money goes toward rent, groceries and dining, and I often fly American Airlines to visit my family in Charlotte. Readers should know that Kelly has advised the company and holds a financial stake in it.

The card earns 2 points per dollar on everyday purchases and up to 1.25 times points on rent and 3 times points on groceries and dining. Various credit-card comparison sites value Bilt points between 1.8 and 2.2 cents each. Bilt points also can be converted to American Airlines tickets via its Alaska Airlines partnership.

The card also comes with up to $400 in annual hotel credits, divided into two $200 credits for eligible bookings via Bilt's travel portal.

The Chase Sapphire Preferred, $95 annual fee: My financial adviser recommended that I keep any annual fee under a $100, making the Sapphire Preferred a good option - especially since it has a $100 hotel credit that could offset the annual fee if I used it for a hotel stay that I was already planning to book. The card offers 5 times points on purchases made through Chase's travel portal (plus 2 times points on all other travel) and 3 times points on dining, gas, streaming services and online grocery purchases. And it has a 75,000-point sign-up bonus (about a $1,500 value) if you spend $5,000 using the card within three months of opening it. But you should only consider that a genuine perk if you meet that requirement through your normal spending.

Right now, I'm leaning toward the Bilt card. The points multiplier on everyday spending is hard to beat, and I like the idea of earning points on my rent payments. A few of my friends who have the Bilt Palladium are always finding creative ways to redeem points for flights through various transfer partners, so I know I can turn to them for tips and tricks on squeezing the most value out of the card in order to make that hefty annual fee worth it.

What do you value most in a rewards card? Let me know at dontshortyourself@marketwatch.com.

💸 Bonus money tip: A cash-back card may be the simplest choice. In July, MarketWatch's summer intern Julian Torres wrote about how he determined that a cash-back card was a better fit for his lifestyle, and he had some good advice: If you value simplicity, you won't love using a card that offers travel rewards. "If keeping track of rewards points through a chart or spreadsheet and regularly checking your credit-card portal just isn't your thing, then a cash-back card could be for you," he wrote.

Key money reads

- Remember that Gen Z investor survey I kept plugging? The results are finally in. I found that young investors are more conservative than you might expect, and many Gen Z-ers are opting for exchange-traded funds over sports bets.

- 8% mortgage rates are "not an impossibility" as the 30-year fixed rate surges.

- Still picking a college major? These fields of study exposed to artificial intelligence could hurt your job prospects.

- And here are five charts showing how inflation has defined the past five years.

Reader tips

Send your favorite way to save or grow your money to dontshortyourself@marketwatch.com, and we'll share it with our readers.

About Genna

I'm Genna Contino, an award-winning journalist on MarketWatch's personal finance team. I'm 27 years old, originally from South Carolina, and currently splitting the rent on an overpriced apartment in New York City with my fiancé. When I'm not writing about my hacks for saving hundreds of dollars on airfare, or must-have money conversations before moving in with your partner, you can find me reading a celebrity memoir, overanalyzing reality TV, junk journaling, borrowing DVDs from the library or getting thoroughly humbled in an adult ballet class after a 10-year hiatus.

-Genna Contino

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

10-03-26 1142ET